With TVN now defunct, we can begin to evaluate the impact that the broadcaster had on the state of racing and media rights.
None of us on the outside of the inner-circle of the racing industry are fully aware of the financial details of the arrangements between Tabcorp’s Sky Racing and New South Wales, nor any proposed arrangement with Victoria.
Yet if the media reports are accurate, it is understood that New South Wales is to receive $25 million per annum for 10 years for its media rights.
I am reliably told that the deal orchestrated by Peter V’landys was spectacular … my words, not those of my informant.
Given the fact that the industry in New South Wales received significantly lower distribution from TVN for its media rights the new deal with Sky indeed appears to be spectacular.
It would not be unreasonable to assume that in the final washout Victoria will also be receiving about $25 million per year for its media rights.
This means that Sky and therefore the TAB will really pay New South Wales and Victoria a total of $50 million per year for their media rights.
If the above is correct, I am somewhat perplexed as to why Sky refused to pay TVN the $40 million requested last year for the same media rights.
Racing NSW made the announcement of the new deal with Sky with much fanfare, albeit they did not reveal the full details of the arrangement.
I suspect the fanfare was more related to the fact that at long last TVN was now dead.
Corporate memory is very important, particularly in the racing industry. I mention this because TVN evolved out of the racing clubs in New South Wales and Victoria wanting a better financial deal for their media product and a better presentation of the product.
TVN was established in 2005. Prior to that time it is my understanding that Sky was only prepared to pay relative peanuts for Victoria and New South Wales media rights. Even in 2006, Sky only paid around $2m per annum according to reports.
Today Sky is paying considerable amounts – maybe in excess of $50m per annum – meaning that the true value of those media rights is conservatively in the range of hundreds of millions of dollars.
I appreciate that TVN has, at times, been very disappointing to both the industry and the consumer.
I haven’t always supported the operation, the presentations or the strategies, but I truly applauded the concept of the industry owning and controlling its own media.
The real point here is to state that had it not been for the significant leverage created through the establishment of TVN, the industry would not be receiving anywhere near the money it is receiving today for its media.
The industry should at this junction pause and acknowledge with great respect those racing administrators who stood their ground against both Sky and RNSW and who created and supported TVN.
TVN was a magnificent industry asset, now destroyed.
At the same time perhaps Racing NSW might like to reflect on the facts and the decision of Hon. Justice Bergin of 3 May 2005 (Racing NSW v STC/AJC) and ponder what might have been had they won that case!
That famous court case, aimed at preventing the Sydney Metropolitan race clubs from selling their commercial media rights to TVN, was lost by Racing NSW.
Racing NSW sought an injunction to restrain the AJC and the STC from using or entering “any agreements, variations, extensions or other agreements in relation to their respective thoroughbred horse racing broadcast rights without the prior consent of Racing NSW”.
The result in the Supreme Court was described at the time as a ‘thumping’ for Racing NSW. The AJC and STC described the decision as a vindication.
So while some feel that the deal done by Peter V’landys was singularly spectacular, I respectfully but forcefully submit that had it not been for the existence of TVN and the leverage it created, such spectacular deals could not have happened.
Media rights are incredibly valuable. And yes, it is true that perhaps TVN only had one customer in Sky Racing. However it should not be forgotten that Tabcorp needs vision, surely it could not survive without it.
It is true that the industry and Tabcorp are in a form of joint venture, but equally it is important that the industry receive due recompense for “putting on the show”.
I’m not sure I will be around when media rights are next up for negotiation but I truly hope that the industry as disconnected or dysfunctional as it is, will get it right when negotiating a fair and true value for its product.
Turning briefly to Victoria, it will be interesting to see what they finally end up with from Sky Racing and Tabcorp, but I would not underestimate the skill and intellect of the gentleman heading up the negotiations, Andrew Twaits, noted as one of the most impressive and respected senior executives in racing.
I’m certain Twaits will negotiate a more than satisfactory arrangement for Victoria, and good luck to them.
Editor’s note: James Mathers is Fellow of Institute of Chartered Accountants in Australia (FCA), a highly respected ATC member, racehorse owner, and a former committeeman of the AJC.
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